ADP, Brokerage Services, Outsourcing
ADP to spin off brokerage-services outsourcing operations
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Automatic Data Processing Inc. (ADP) confirmed plans to spin off its brokerage-services group business to shareholders.
The decision to spin off ADP's broker-services unit comes after a year-long strategic review that included the possible routes of an initial public offering and a sale, ADP President Gary Butler said Wednesday in an interview with MarketWatch. "We determined that the best outcome for the shareholders was a tax-free spin," he said. "It's about fit and focus in terms of what we're trying to do. This thing will do well unconstrained by the conservative nature of the employer-services business model."
ADP's brokerage-services outsourcing business is one of the industry's largest, helping stockbrokers such as Lehman Brothers Holdings Inc. (LEH) with the "back-office" part of buying and selling stocks and bonds. The unit processes and clears securities trades, while also distributing financial reports and proxy materials to shareholders for corporations. Through the fiscal year ended in June, the unit produced roughly 20% of ADP's overall revenue and net income, generating $2 billion in revenue and about $300 million in net income.
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